Board’s Fundraising Role and Financial Risk

I’m often asked about the Board’s fundraising role. I recently worked with an organization that didn’t receive a grant renewal of $100,000. The funder said their budget was too dependent on grant funding and thus, a risky investment. Their budget is over $700,000, and their individual donations are $8,000. Their 13 board members donate, but didn’t fundraise, write donors, or bring in any other donations. The board’s fundraising role had been neglected.

Where are you headed?

Another nonprofit I advised was informed by a funder that they were no longer going to fund them. Why? The funder said it looked like they were stable and didn’t need their funding anymore. So, they cut their grant from $300,000 to $o. They have a $1.2 million budget: 70% of which is in foundations and corporate sponsorships. The rest comes from government and rental income. Individual donations hovered around $20,000, and board fundraising efforts by a 17 board members was a big fat $0. The board’s fundraising role was not a priority.

Are you at risk?

So . . . Imagine either of these scenarios at your organization.

Even with advance notice, could you suddenly raise $100,000 to meet your budgetary needs?

According to the Nonprofit Finance Fund’s 2015 State of the Sector report, 53% of nonprofits surveyed have 3 months or less of cash on hand to meet operations. Where do you fall? Are you one of those nonprofits so caught in the cul-de-sac of your existing funding patterns that you no longer have financial resilience? If so, the dangers and limits of this situation can hugely impact your mission. John Pratt’s income reliability matrix is a tool any organization can use to assess how much at-risk their organization is in terms of funding. And this is where the board’s fundraising role and income strategy focus comes in.

The board’s fundraising role

Your board’s fundraising role is to bfundraising engine that, along with your chief fundraiser (executive director, or development director), can make the difference between stability or teetering in the winds of change. Analyzing your financial resilience as a strategic imperative is essential.

So, here’s what I recommend:

You need 100% buy-in from your board to make financial resilience a priority. It requires full board engagement. Most of all, they need to prioritize and take action. To map the right mix of income sources, takes understanding of the impact on the organization. How will the new activities will impact human and financial resources? Do you have the capacity to do something different?

And, you need a team to serve as a task force to explore the potential of each strategy. What are the challenges, benchmarks, and methodology? Earned revenue, fee for service, social enterprise? Small to mid-size donations? Major gifts? They all take work, resources, and strategy.

Get the right people on board to make it happen! Many boards have 1/3 that actively engage, 1/3 that will do something if asked, and 1/3 that are dead weight. So, seriously consider who can help to provide experience, leadership and enjoy challenges. Even consider people who could only come on board for a year. To climb out of existing patterns, you need energy and commitment from everyone.

Prioritize. Where’s the biggest impact you can make with the resources you have? And grants? Yes, that’s still part of the mix. But maybe it’s a capacity building grant to support the new path to sustainability.

Do it now!

Do it now!

It sounds like a long and drawn out process, right? It doesn’t have to be. That’s why you need a team/task force. And you may need someone internally or externally to drive the process and timeline. It will not be a long drawn out process if the team agrees to meet weekly for three months. Since this is a short term initiative to create your financial resilience and sustainability plan, include a timeline and action steps for achievement. So, do it now — don’t wait until your organization is in crisis, scrambling to make up those lost dollars. And if you want help getting your plan together, let’s talk!

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